E-Commerce service provider eBay Inc. (EBAY) recently announced that its digital payment arm PayPal has partnered with three Bitcoin payment providers — BitPay, Coinbase and GoCoin — to facilitate payment on its website using the online currency.
This partnership will enable PayPal merchants to accept Bitcoins from buyers for the purchase of music, movies and other digital content. All merchants using the PayPal Payments Hub will now be able to offer a Bitcoin payment option to customers at the online checkout system along with other options like PayPal, debit or credit cards, prepaid cards or a digital wallet. However, initially, this will be available only to merchants in North America.
Bitcoin is a digital currency platform with no central regulating authority involved in the transactions which take place between the involved parties only. It is also called crypto currency because it uses military-grade cryptography to protect users against fraud. Payments using Bitcoin can be made via different smartphone apps or their desktop versions. This is generally used for transferring funds electronically and does not require a credit card or PIN.
The wide acceptance of the electronic currency platform will enable online enthusiasts to indulge in impulsive buying. The strict security measures adopted by the platform to ensure safety will be an added advantage for uninitiated buyers.
According to a website tracking the digital money’s use, CoinDesk, approximately 63,000 businesses handle Bitcoins and have set up more than 5 million digital wallets to keep their holdings. Recently, Expedia (EXPE) announced that it will allow users to pay for hotel accommodations using Bitcoins.
PayPal is taking all the necessary measures to boost its competitive position in the mobile payment segment. It is pushing beyond its online payment services and expanding the offline, mobile and online offerings to stores, restaurants and other businesses. The popular electronic payment facility will help the company facilitate an easier payment process for its digital content.
Though eBay’s payment business shows great promise, competition remains a major headwind. However, the latest move would position PayPal better against rival mobile payment systems such as Amazon.com Inc.’s (AMZN) recently launched Amazon Payments, Intuit Inc.'s (INTU) GoPayment and Starbucks-backed Square Inc. and others.
Currently, eBay’s shares carry a Zacks Rank #3 (Hold).
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